You won’t notice carbon-tax hike, economist says
‘Unless you’re paying attention, you probably won’t notice it’: professor
CALGARY The average Alberta household will see bills rise by about $150 next year due to a 50-per-cent increase in the carbon tax, a University of Calgary economist said Thursday.
But 60 per cent of the province’s households will see those costs covered by the province’s rebate program, which is indexed to increases in the carbon levy that rises to $30 a tonne from $20 a tonne on Jan. 1, said Trevor Tombe.
For the most part, the increases will be largely insignificant, even before the rebate, he said.
“Unless you’re paying attention, you probably won’t notice it,” he said, referring particularly to the 2.24-cents-per-litre hike at the gasoline pumps.
More apparent on utility bills, he said, will be a $0.506 per gigajoule rise in natural gas bills, which will move the carbon tax share of that invoice to 15 per cent from 10 per cent.
Along with higher indirect costs — such as transportation for goods, which will add another $50 — the higher costs per average household will be about $150, said Tombe.
“It’ll be felt a lot less than some rhetoric, that we’re going to see a 75-per-cent increase in home heating costs, when it’ll be more like five per cent,” he said.
It will take a toll on an Alberta economy enjoying a recovery, though it won’t be enough to blunt it, added Tombe.
“Carbon taxes hurt the economy, all environmental policies that work this way do, but you’re looking at it shaving .05 per cent, .1 per cent off the GDP,” he said.
“And for an economy that’s forecast to grow from four per cent to 6.7 per cent, it’s not something you could credibly say will doom the economy,” said Tombe.
But when that hike is tacked on to the initial $20-per-tonne levy imposed a year ago, it’s another burden for an economy that’s still struggling in some sectors, said Colin Craig, Alberta spokesman for the Canadian Taxpayers Federation.
“This is just another layer of cost that’ll make it harder for businesses to hire workers,” he said.
It also makes local businesses less competitive with jurisdictions not saddled with such a levy, said Craig.
And for those just above the income threshold for a rebate, such as families making more than $95,000, it’s a definite financial setback, he said.
“For Albertans paying another $600 a year and aren’t getting a rebate, that’s a pretty sizable number,” said Craig, who added indirect costs to the $508 the province says the 2017 and 2018 tax will total for a family of four.
“When you have two people making $50,000 each, that’s a middle-income family … you’re not rich, that’s going to hurt a lot of families.”
On its carbon tax calculator web page, the province said indirect costs should range between $70 to $105 for a household, which it considered limited.
“The increase is expected to be relatively small, since commodities imported outside the province are not subject to the levy,” it states.
“It’s assumed that businesses subject to the levy pass 50 per cent to 75 per cent of the related costs to consumers.”
The NDP government said it’s using revenue generated by the tax to fund energy diversification and efficiency efforts, public transit and a cut in the small business tax rate to two per cent from three per cent, among other initiatives.
It also aims to encourage Albertans to use less energy, although the U of C’s Tombe questioned if it will affect most Albertans’ shortterm consumption behaviour.
Over the next three years, the levy is expected to raise $5.4 billion.